Bankruptcy and Chrysler

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If the Times‘s sources are correct, it looks like we’re going to see a bankruptcy filling from Chrysler later today. A few debtors have balked at the Treasury Department’s offer of 33 cents on the dollar:

To win over several hedge funds, which have been holding out for better terms, the Treasury increased its cash offer to holders of Chrysler’s secured debt by $250 million, to $2.25 billion, these people said. If all of the secured holders would agree to the new deal, which would give them the cash in exchange for retiring about $6.9 billion of debt, Chrysler would still have a chance of restructuring out of bankruptcy court.

[…]

The four big banks that own 70 percent of Chrysler’s secured debt have already signed on to the Treasury’s plan and are trying to line up the other lenders in favor of the new terms.

If all 46 lenders do not agree to the new offer, and a bankruptcy filing occurs, the lenders will be forced to accept the $2 billion they were originally offered or fight in court for a higher amount.

This conjures two questions in my head: Why do these holdouts think they can get better terms? Do they really think the bankruptcy courts are going to be more amiable to them, especially after considering the debtors who hold a vast majority of Chrysler’s liabilities have accepted the Treasury’s terms? The Treasury’s deal would leave about $675 million for the holdouts. I say take the money and swallow your losses on the bad investment; the deal doesn’t look like it will get much sweeter.

UPDATE: The Obama administration has confirmed Chrysler will indeed for bankruptcy today.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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